Group turnover for the year was £74.8m, up 3% from £72.7m recorded in 2008.

The Kendal-based company, which produces speciality paper for text and cover, printing, filing materials and packaging, said "significant progress" has been made in reducing its first-half losses, which were a result of the "severe impact" of rising energy and pulp costs.

Sales in its speciality paper division were up £1.5m to £49.8m, helping to mitigate an increase of 13% in raw material and energy costs, which increased by £3.4m.  

The speciality division made an operating loss of £310,000, compared with a profit of £1.3m the same time a year earlier.

Chairman James Cropper said throughout the year, "strenuous efforts" had been made to reduce the company's cost base through greater energy efficiency, productivity and lower wastage.

As a result, he said he expected the speciality paper division to continue recovering in the year ahead, despite uncertainties in exchange rates, energy prices and raw material costs.

"The downturn in the global economy creates a challenging trading climate for the group," he said.

"Nevertheless, I am confident that in the short-term our existing management approach will enable the group to capitalise on opportunities when the economic climate becomes more favourable, thus leading to significant growth in the medium- to long-term."